Chaparral Steel Company Investor Presentation

Davenport & CompanyFebruary 27, 2007

Safe Harbor Statement

Certain Statements contained in this presentation are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and other factors, which could cause actualresults to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the impact of competitive pressures and changing economic and financial conditions on the Company’s business, construction activity in the Company’s markets, changes in the costs of raw materials, fuel and energy, the impact of environmental laws, unexpected equipment failures, the effect of foreign currency valuations and other regulations, which are more fully described in the Company’s Annual Report on Form 10-K filed with the SEC.

Company Overview

• Founded in 1973, Chaparral is the second largest producer of structural steel products in North America and a major producer of steel bar products

• Operate two plants located in Texas and Virginia with over 2.6 million tons of capacity.

• Products marketed throughout Canada, Europe, Mexico and the United States

• Customers include steel service centers, steel fabricators, coldfinishers, forgers and OEMs

LTM Ended Nov. 06 Net Sales: $1.5 billionLTM Ended Nov. 06 EBITDA: $432 million

Note: Fiscal year ending May 31, 2005. Excludes delivery fees.

Bar Steel17%

Structural Steel80%

OtherSteel3%

Industry and Market Dynamics

Unique Industry Fundamentals

• The U.S. structural steel market is a niche market– Approximately 8.0 million tons shipped, accounting for less than

6.0% of total U.S. steel shipments in 2006– Three North American producers: Nucor, Chaparral and Steel

Dynamics– Imports are not a significant component of the structural steel market

at less than 10%• Consumption of structural steel products in North America is

driven primarily by non-residential construction • Strong profitability of the structural steel sector being driven in

part by:– Industry consolidation – Focus on profitability vs. capacity utilization– Weak U.S. dollar– Higher international transportation costs– Strong international demand

Industry Consolidation

1980s: Today:

• Consolidation of North American structural steel producers sincethe 1980s has resulted in a more rational and profitable industry

Inland Steel

• Today’s structural steel producers:– Share a similar low cost structure– Focus on profitability instead of capacity utilization

Inland

Favorable Supply Dynamics

U.S. Dollar / Euro Exchange Rate Freight Rates (Baltic Dry Freight Index)

Domestic Structural Steel Imports and Penetration

• Over 5% of imports are needed from overseas because certain structural products are not produced domestically

(000s of tons)

Source: Bloomberg, AISI and other publicly available data.

9%

12%

15%

10%9%9%

300

600

900

1,200

1,500

2001 2002 2003 2004 2005 LTM 2 4 6 8 10 12 14 16

Imports % Penetration

-

1,000

2,000

3,000

4,000

5,000

6,000

2001 2002 2003 2004 2005 Dec-060.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06

Non-Residential Construction Market• U.S. non-residential construction started to recover in 2005 off the

lows of most of the 2000’s but is still well below the highs set in the late 90’s into the year 2000.– The market is being driven by industrial projects, warehouse space,

schools and hospitals, and retail markets. – Office space development continues to be light but should improve

and vacancy rates are tightening.

U.S. Non-Residential Construction

Business Overview

Business Strategy

• Maximize profits and cash flow

• Focus on our core business

• Maintain our low cost position

• Maintain a conservative financial position

• Enhance stockholder value by – Continuing to improve efficiencies– Exploring growth opportunities– Paying dividends and repurchasing shares

RetailCommercialMunicipalPublic WorksMilitary AutomotiveForgers

Diversified Product Mix & End-User Markets

• Diversified mix of products allows Chaparral to access a broad range of end-user markets and serve a broad customer base .

• Over 230 different types, sizes and grades of steel are marketed to approximately 3,000 customers.

Net Sales by Product Net Sales by End Market

Fabricators / OEMs

37%

Service Centers

63%

Bar Steel17%

Structural Steel80%

OtherSteel3%

Note: Fiscal year ending May 31, 2005. Excludes delivery fees.

Product Lines

• Structural Products

• Bar Products • Piling Products

• Chaparral has approximately 25% market share in the U.S. structural steel sector.

• The products we manufacture address over 85% of the market’s needs.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2003 2004 2005 2006 LTM 11/06

(Ton

s in

000

's)

$0

$100

$200

$300

$400

$500

$600

$700

($ per ton)

Volume Price

Structural Products

• Focus continues to be to move away from commodity rebar into higher value niche and specialty bar product markets.

FY 2002 LTM Nov. 06

SBQ75%

Rebar and MBQ25%

SBQ49%

Rebar and MBQ51%

0

100

200

300

400

500

2003 2004 2005 2006 LTM 11/06

(Ton

s in

000

's)

$200

$300

$400

$500

$600

$700

($ per ton)

Volume Price

Bar Products

• Used primarily by the public works sector, a more stable end market

• We are the only domestic manufacturer capable of producing international sizes

• Patented PZC piling product• For FY 2006 we produced and shipped 115,000 tons of Z pile

products both domestically and internationally• Growing demand both domestically and internationally with

expanding product applications.

Z-Piling Products

• Our on-site shredding operations generate significant raw material cost savings – Largest single-site shredders in North America (40% of scrap

generated internally)

– Favorably located near markets of significant supply

• Efficient and highly motivated workforce– Non-union with no legacy liabilities

• Other ongoing cost savings initiatives include– STAR recycling program produces over 30,000 tons annually

– Strong safety record has resulted in over $2 million of savings

Focus on Efficient Production

Growth Opportunities

• Continued improvement in non-residential construction

• Potentially pursue opportunities within select, niche product areas that leverage our core skills

• Monitor upstream / downstream opportunities

• Joint ventures and alliances

• Return requirements must be met

Financial Overview

Chaparral Stock Performance

• Up 459% since the spin-off on July 29, 2005• Average daily trading volume of 606,000 shares (last 3 months)

On February 16, 2007, Chaparral’s stock price closed at $51.46 per share:

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

25-Jul-05

22-Aug-05

19-Sep-05

17-Oct-05

14-Nov-05

12-Dec-05

9-Jan-06

6-Feb-06

6-Mar-06

3-Apr-06

1-May-06

30-May-06

26-Jun-06

24-Jul-06

21-Aug-06

18-Sep-06

16-Oct-06

13-Nov-06

11-Dec-06

8-Jan-07

5-Feb-07

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

Avg Daily Vol Price

Earnings Per Share

$5.00

$3.32

$1.71

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

FY 05* FY 06 First Call FY 07

($ e

arn

ing

s p

er

sh

are

)

* Were a wholly owned subsidiary of Texas Industries Inc. and had a different overhead and capital structures

Increasing share price being driven by improving earnings.

Conservative Capital Structure

• Total assets of $1.4 billion

• Cash and short-term investment of $324 million

• Total Debt of $300 million.– Maintain a $150 million line of credit

• Normalized capital expenditures of $25-$30 million

Note: Free cash flow defined as EBITDA less capital expenditures less cash interest expense less cash taxes. Assumes no change in working capital.

Investment Considerations

• Focus on low cost

• Attractive industry fundamentals

• Diversified and expanding product mix and end-user markets

• Strong free cash flow generation

• Increase shareholder value through strong deleveraging and increased capacity utilization

• Strong management team

Chaparral Steel Company Investor Presentation

Davenport & CompanyFebruary 27, 2007